EQUITIES
Shares in Asia-Pacific slipped on Wednesday trade. Australia’s S&P/ASX 200 led losses among the region’s major markets as it dropped 2.10%. The Nikkei 225 in Japan fell 1.37% while the Singapore’s FTSE Straits Times Index slipped 0.62% and the mainland Chinese stock, the Shanghai composite retreated 0.41%.
Elsewhere, the India’s S&P BSE Sensex index advanced 0.06%.
Markets in Hong Kong and South Korea are closed today for holidays.
Overnight on Wall Street, the Dow Jones Industrial Average fell 0.78%, to 34,060.66, the S&P 500 lost 0.85%, to 4,127.83 and the Nasdaq Composite dropped 0.56%, to 13,303.64.
OIL
Oil prices pulled back after media reports the U.S. and Iran have made progress on reviving a deal restricting the OPEC country's nuclear weapons development, a development that could lead to increased supply from Iran.
The Brent crude futures traded at $68.03 per barrel, and U.S. crude futures traded at $64.79 per barrel.
Overnight, the Brent closed at $68.71 while WTI ended at $65.49 per barrel.
CURRENCIES
The U.S. dollar stayed under pressure as yields stayed flat. The dollar index against a basket of six major currencies was quoted at 89.74, as it touched its lowest level since late February. The yield on 10-year Treasuries stood little changed at 1.642%.
In the cryptocurrency market, bitcoin fell to a 3-month low of $40,548. The second largest cryptocurrency ether dropped more than 25% from its record peak hit last Wednesday, amid market jitters after China banned its financial institutions and payment companies from providing services related to cryptocurrency transactions.
GOLD
Gold prices were solid on Wednesday, hovering near a 4-month high on a weaker dollar and growing inflationary pressure.
The spot gold rose to trade at $1,869.20 an ounce and added to $1,869.80 per ounce for gold futures. Previously closed at $1,869.10 and $1,868.00, respectively.
ECONOMIC OUTLOOK
Asian stocks dipped on Wednesday as uncertainties over inflation prompted investors to reduce exposure to riskier assets, while rising virus infections in the region also hampered the bet on the global recovery.
Markets are now waiting on the release of the minutes from the Fed’s policy meeting late on Wednesday, which could shed more light on the policymakers' outlook on inflation and an economic rebound. The Federal Reserve has stuck to the narrative that a recent rise in inflation would be transient and that it therefore should keep its easy monetary policy settings. The minutes later today are expected to repeat that message.
Data from the API showed crude inventories rose by 620,000 barrels in the week ended May 14, while gasoline inventories fell by 2.8 million barrels and distillate stocks fell by 2.6 million barrels.
Among U.S. corporate earnings due today including JD.com, Lowe's, Target, TJX Companies, L Brands, Analog Devices & Cisco.
Some key events to watch today including the FOMC minutes, EIA oil market data, and Eurozone & UK inflation rate.
To date, number of confirmed worldwide cases for COVID-19 pandemic has surpassed 163.96 million, recording more than 3.39 million fatality globally.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 109.282 and 109.467.
- Support line of 108.684 and 108.499.
Commentary/ Reason:
The U.S. dollar stood at 108.958 yen, bounced back after recorded its lowest since May 12. The currency pair has been locked in a narrow range in recent trading.
While a lower T-note yields weakened the dollar’s interest rate differentials and was bearish for the dollar, concerns about COVID-19 cases continue to weigh on Asian foreign exchange trading.
The USD/JPY continues to oscillate within the uptrend although oscillations have been narrowing. The ascending trendline will remain as a key support level for the pair. Momentum indicators are bullish, with MACD languishing around the zero line.
